Document Actions

P1.3: Water Management

CERES ROADMAP EXPECTATION

Companies will assess water-related impacts and risks and will set targets to improve water use and wastewater discharge, with priority given to operations in water-stressed regions.

Advancing Coca-Cola's Water Stewardship with the Ceres Aqua Gauge

Comprehensive water stewardship is a top business priority for The Coca-Cola Company, which since 2004 has improved the efficiency of its water use by 20 percent. However, as water risks intensify globally and investor and stakeholder expectations continue to grow, Coca-Cola identified the need for a rigorous third-party evaluation of its water management approach. Read more...

Check out Roadmap in Action for more examples of how companies are implementing the Ceres Roadmap.

For most companies, water is a key requirement for doing business. Agricultural irrigation accounts for approximately 70 percent of all global freshwater use10and the U.S. electric power industry alone requires an estimated 136 billion gallons of water per day for generating and then cooling the steam that drives electric turbines.11 Population growth, rapid industrialization in the developing world and the impacts of climate change are placing this critical resource under increasing pressure in terms of both availability and quality. These trends are creating unprecedented challenges for water-reliant companies, especially those with operations and supply chains in vulnerable regions.

The nature and extent of corporate impacts on and risks relating to fresh water scarcity will differ by geographic region and type of business. Even so, in an environment where increasing numbers of people suffer from limited water availability, companies will face growing pressure to manage those impacts. Companies should analyze specific risks that incorporate local-level hydrological, social, economic and political factors, as well as being mindful of the potential impacts of climate change on water supplies and water quality. Water risk should also be considered when siting new facilities and companies can engage local stakeholders to better understand, anticipate, and collectively manage shared water resources.

HOW ARE COMPANIES PERFORMING?

In The Road to 2020: Corporate Progress on The Ceres Roadmap For Sustainability, we evaluated 600 of the largest U.S. companies on their progress towards meeting the expectations laid forth in The Ceres Roadmap for Sustainability. Using data compiled and analyzed by Sustainalytics, for this expectation our analysis focused on four sectors that are especially water-sensitive and water-intensive—Food & Beverage, Footwear & Apparel, Oil & Gas Producers and Utilities.

Of the 105 companies assessed, 28 percent (30 companies) are in Tiers 1 and 2 for efforts to track water use, disclose water accounting metrics, assess water risk exposure and implement programs and targets for improving water management. The majority of top performers are Food & Beverage firms, with 62 percent of companies in the sector (16 of 26 companies) included in Tiers 1 and 2. Water management remains, however, a key area where improvement is needed for both the Footwear & Apparel and Oil & Gas Producing sectors, which together represent 32 of the 53 companies falling in Tier 4.

A strong water management strategy begins with a comprehensive audit to identify water withdrawal, discharges and recycling/reuse across all operations. Among Food & Beverage companies, roughly three-quarters are reporting on at least one of the three metrics listed above; in 2010, approximately 60 percent of companies in the Food & Beverage sector responded to the first annual water disclosure survey by the Carbon Disclosure Project. This relatively high response rate shows that companies recognize the strategic nature of water resources to their social license to operate, business continuity and operating costs.

Of the 105 companies evaluated for this expectation, more than 80 percent (88 companies) disclose some level of water risk exposure. However, only 25 percent have undertaken assessments to identify specific water-related risks, such as geographic-specific exposure, or cite use of internal or recognized third-party water risk evaluation tools (i.e. the World Business Council for Sustainable Development [WBCSD] Water Tool). Just more than 40 percent of Food and Beverage companies (11) conduct more in depth assessments of water-related risks, while only 25 percent (nine) of Utility, 18 percent (two) of Footwear & Apparel, and 15 percent (five) of Oil and Gas companies have invested a comparable level of risk assessment and disclosure.

Most Electric Utility companies (75 percent) fall into Tiers 3 and 4 for water management. This is especially concerning given the water needs of nuclear and fossil fuel power plants. Among the few standouts is Arizona-based Pinnacle West, which uses recycled urban wastewater to cool the reactors at its Palo Verde nuclear generating station. The company estimates it is reusing about 20 billion gallons of wastewater each year, thereby preserving enough potable water to service approximately 75,000 homes.12